DWARKA PRASAD, J. - (1.) THESE six applications under s. 27(3) of the WT Act arise in similar circumstances and raise similar questions and are, therefore, disposed of by a common order.
(2.) MR. Naushir K. Marfatia and Smt. Gulnar Marfatia were partners in the firm, New Majestic Talkies, Ajmer. Master Kairas Tarapore (minor) was also admitted to the benefits of the partnership. Smt. Gulnar Marfatia filed returns of wealth in respect of the asst. yrs. 1975-76 and 1976-77 showing the value of the assets of the firm at Rs. 3,05,522 and submitted that the net wealth of the assessee was not liable to payment of under the WT Act. She submitted an approved valuer's report in respect of her contention and the assessments were completed by the WTO, accepting the report of the approved valuer. No returns of wealth were filed in respect of Naushir K. Marfatia and Master Kairas Tarapore in relation to the asst. yrs. 1973-74, 1974-75, 1975-76 and 1976-77, allegedly on the ground that they were not liable to payment of wealth-tax. In the case of Smt. Gulnar Marfatia, a reference was made to the Valuation Officer on 21st Jan., 1977, in respect of the asst. yr. 1976-77. The report of the Valuation Officer was received on 22nd April, 1978. The Valuation Officer assessed the value of the assets of the firm at Rs. 9,92,000. After the report of the Valuation Officer was received, the WTO issued notices to Naushir Marfatia under s. 17(1) of the WT Act on the ground that he has reason to believe that on account of the failure on the part of such person to make a return of wealth under s. 14 of the WT Act of his net wealth, the net wealth chargeable to tax under the Act had escaped assessment for the years 1973-74, 1974-75, 1975-76 and 1976-77. Similar notices were issued to Master Kairas Tarapore under s. 17(1) of the WT Act in respect of the asst. yrs. 1975-76 and 1976-77. The WTO also issued notices for reassessment to Mst. Gulnar Marfatia in respect of the asst. yrs. 1975-76 and 1976-77. On account of the failure on the part of the assessee to disclose true and full particulars of her wealth, net wealth had been underassessed. In pursuance of the notice issued under s. 17, the concerned assessees filed their returns of wealth and the WTO completed the assessments and reassessments adopting the value of the assets determined by the District Valuation Officer as the proper value thereof. The assessees filed appeals. The AAC held that the WTO was justified in making assessments in the cases of Mr. Naushir Marfatia and Master Kairas Tarapore and also in reopening the assessment in the case of Mst. Gulnar Marfatia. It was observed by the AAC that the assessees had valued the property on the basis of land and building method, while the District Valuation Officer had assessed the value of the property which formed the assets of the partnership, on the basis of the yield and that the method of valuation adopted by the District Valuation Officer was more correct. All the three assessees, named above, filed appeals before the Tribunal, Calcutta "E"Bench (Camp Jaipur). The Tribunal allowed all the appeals by its order dt. 16th Feb., 1981, apparently first considering the case of Mst. Gulnar Marfatia relating to reopening of the assessments in respect of the asst. yrs. 1975-76 and 1976-77. It was held by the Tribunal that as no proceedings were pending before the WTO when he made a reference to the District Valuation Officer, the provisions of s. 16A of the WT Act could not have been resorted to and a reference could not have been made to the District Valuation Officer under the said provisions because the reference under s. 16A(1) could be made only during the pendency of assessment proceedings and not for the purpose of reopening a completed assessment. It was also observed by the Tribunal that once the assessment was validly reopened, the WTO could make a reference under s. 16A, but the report of the Valuation Officer under s. 16A could not precede the reopening of the assessment when such reference under s. 16A was not made during the pendency of the assessment proceedings. The Tribunal, following the decision of the Calcutta High Court in Satyendra Chunder Ghose vs. WTO (1979) 12 CTR (Cal) 155 : (1980) 126 ITR 102 (Cal) : TC66R.257, held that the assessments had not been validly reopened and the orders passed by the AAC were set aside and the assessments made under s. 17 of the WT Act were cancelled. It appears, on a reading of the order of the Tribunal dt. 16th Feb., 1981, that it only considered the case of Smt. Gulnar Marfatia as it came to the conclusion that on the basis of the report of the District Valuation Officer under s. 16A, the assessments could not have been validly reopened. In the case of Naushir K. Marfatia and Master Kairas Tarapore, assessments had not taken place earlier as neither did the concerned assessee file any returns under s. 14(1) of the WT Act nor did the WTO give any notice under s. 14(2) of the Act. The question as to whether the report of the District Valuation Officer received in connection with the assessment of Mst. Gulnar Marfatia relating to the asst. yr. 1976-77 could constitute material for the WTO for having reason to believe that the net wealth of the assessee chargeable to tax under the Act has escaped assessment, was not considered by the Tribunal, but the assessments made under s. 17(1) of the Act and the orders passed by the AAC were set aside. The Department submitted an application under s. 27(1) of the WT Act before the Tribunal requesting the Tribunal to refer the following question arising out of its order dt. 16th Feb., 1981, to this Court for its opinion : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding, that the assessment has not been validly reopened and in setting aside the order of the AAC and cancelling the assessment made under s. 17 of the WT Act, 1957 ?" The Tribunal, by its order dt. 25th May, 1981, rejected the applications for making a reference on the ground that the question sought to be referred by the CWT, Jaipur, was decided by the Calcutta and Rajasthan High Courts and the legal position set out by the two High Courts was accepted by the Department and further that the principle laid down in the decisions of the two High Courts was applied by the Tribunal to the cases at hand and the same became final. As such, there was no referable question of law arising out of the orders of the Tribunal. After the rejection of the applications under s. 27(1), the CWT, Rajasthan, Jaipur, has filed these applications under s. 27(3) of the WT Act to this Court seeking reference of the question arising out of the order of the Tribunal dt. 16th Feb., 1981, for its opinion.
(3.) LEARNED counsel for the Department submitted before us that the decisions of the Calcutta and Rajasthan High Courts referred to by the Tribunal related to the question as to whether a reference could be made under s. 16A(1) of the WT Act after the assessments were completed and it was held that such a reference after the completion of the assessments was without jurisdiction and that the assessments made in such cases could not be reopened under s. 17 on the basis of the report of the Valuation Officer. However, the decisions of the aforesaid two Courts did not consider the question as to whether in the case of assessees who did not file the returns under s. 14(1) and were not called upon to file a return under s. 14(2) by the WTO, the report of the Valuation Officer in respect of a partner of the firm would constitute material for having reason to believe that the net wealth of the said assessee had escaped assessment to tax under the WT Act, because such a question did not arise in those cases. It was further submitted that the Tribunal failed to consider this aspect of the matter, as to whether the report of the Valuation Officer in the case of Smt. Gulnar Marfatia could constitute material for the WTO for having reason to believe within the meaning of s. 17(1)(a), in the cases of Naushir K. Marfatia and Mst. Kairas Tarapore on account of the omission on the part of those persons to file returns of their wealth in respect of the asst. yrs. 1973-74 to 1976-77. In Satyendra Chunder Ghose vs. WTO (supra), the Calcutta High Court held that a reference could not be made under s. 16A(1) of the WT Act where assessment has been completed. It was held that the provisions of s. 16A authorise the WTO to make a reference to the Valuation Officer for the valuation of an asset for the purpose of making an assessment which contemplates a case where no assessment has been made. It may also include cases where the assessments having become final, the matter has already been reopened under s. 17 of the WT Act, because it would also be a case of calling for the valuation of the asset for the purpose of making an assessment, but once assessment has been completed and assessment proceedings are not pending before the WTO, the WTO cannot make a reference to the Valuation Officer for the valuation of an asset because such power under s. 16A could not be exercised by the WTO only for the purpose of deciding the question whether assessment already completed should be reopened under s. 17 or not. To the same effect is the decision of this Court in Brig. B. Lall vs. WTO (1980) 15 CTR (Raj) 180 : (1981) 127 ITR 308 (Raj) : TC66R.266. In that case also, after completion of the assessment, the WTO called for the report of the Valuation Officer and on the basis of such report, the assessments were sought to be reopened under s. 17(1)(b). The notices for initiation of reassessment proceedings were challenged before this Court in a writ petition and it was held that the Valuation Officer's report called for after the completion of the assessment proceedings could not form the basis of reassessment. To the same effect is the decision of the Madhya Pradesh High Court in Onkarji Kasturchand (HUF) vs. WTO (1982) 135 ITR 188 (MP) : TC66R.298. It was held in that case that the reference made by the WTO to the Valuation Officer after the completion of the assessment proceedings was not valid and so also the subsequent proceedings before the Valuation Officer. It was observed that the WTO could make a reference to the Valuation Officer afresh in accordance with law for the purpose of making an assessment of the assessee in respect of the years for which no assessment was made. The matters considered in the aforesaid decisions related to cases of completed assessments, where the assessments were sought to be reopened on the basis of valuation reports called for by the WTO after the completion of the assessment proceedings. None of the cases cited by learned counsel for the assessee before the Tribunal or before us, refers to such cases where no assessment had taken place on account of the omission of the assessee to file a return of his net wealth and no assessment proceedings under s. 14 had taken place and on the basis of the valuation report relating to the same property in another case, the WTO gave notice for assessment under s. 17(1)(a) on the ground that he had reason to believe that by reason of the omission of the assessee to file a return under s. 14 of his net wealth, the wealth of such assessee chargeable to tax had escaped assessment for that year and the notices were not proper or valid. ;